Kaycee Land and Livestock v. Flahive Oil & Gas LLC

Supreme Court of Wyoming · Corporations

CorporationsLimited Liability CompaniesPiercing the VeilLLClimited liabilitypiercing the veilequitycorporate veil

Facts

Flahive Oil & Gas was a Wyoming LLC and had no assets at the time of the certification. Kaycee Land and Livestock had contracted with the LLC to allow use of the surface of its real property and alleged the LLC caused environmental contamination on that property. Roger Flahive was the managing member of the LLC at all relevant times. Kaycee sought to disregard the LLC entity and hold Roger Flahive individually liable, and there was no allegation of fraud.

Issue

In the absence of fraud, is piercing the veil of a Wyoming limited liability company, or otherwise disregarding the LLC entity in the same manner as a corporate veil, an available remedy under the Wyoming Limited Liability Company Act?

Rule

Under Wyoming law, piercing the veil is an equitable doctrine available when recognition of a separate entity would lead to injustice, fundamental unfairness, or inequity. The remedy is available against an LLC under the Wyoming Limited Liability Company Act even in the absence of fraud, although application depends on a fact-intensive inquiry and LLC-specific factors need not be identical to corporate factors.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Casper, Wyoming, High Basin Concrete LLC signed a site-cleanup agreement with Nora Jensen. After debris was dumped across her land, the LLC had no remaining assets. Nora sues the LLC's sole member, Evan Pike, seeking to disregard the LLC entity, but she does not allege fraud.

How should a Wyoming court rule on Evan's argument that the claim must be dismissed because fraud is not alleged?

Explanation. The majority held that under Wyoming law, piercing the veil is an equitable doctrine aimed at preventing injustice, fundamental unfairness, or inequity, and fraud is not a prerequisite. The LLC statute's grant of limited liability does not categorically bar a court from considering veil piercing. The court did not decide that piercing was warranted on these facts, only that the remedy is available.